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Judge rejects allegations of fraud and conspiracy

FOR IMMEDIATE RELEASE

CONTACTS: Janis L. Smith
Phone: 703-738-0230
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Karmela Lejarde
Phone: 703-761-1274
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Reston Va., Sept. 12, 2011—The U.S. District Court for the Northern District of Georgia (Atlanta) dismissed all claims against Mortgage Electronic Registration Systems, Inc. (MERS) and all other defendants in pdf Jenkins v. McCalla Raymer (677 KB) .

In this putative class-action lawsuit, District Judge Charles A. Pannell adopted the Magistrate’s Report and Recommendation for dismissal and rejected the plaintiffs’ allegations of fraud and conspiracy, stating that the use of MERS as grantee of the plaintiffs’ security deeds is not fraudulent because MERS is clearly disclosed in that capacity even though the term “nominee” is not defined in the security instrument. In his ruling last week, the judge found no merit in the plaintiffs’ claims that the MERS assignments of the security deeds were fraudulent or that MERS made misrepresentations to the plaintiffs through the MERS assignments themselves. The Court noted that MERS could not have made these misrepresentations to the plaintiffs through the assignments because the plaintiffs were not parties to the assignments.

“Judge Pannell’s decision continues to reinforce the legality of the MERS business model around the country,” said Janis L. Smith, MERSCORP Vice President of Corporate Communications. “MERS as the mortgagee brings more transparency to the mortgage lending process. The company’s role is disclosed on the security instrument to the borrower and borrowers use our database to locate the servicer and owner of their loans.”

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Ninth Circuit says borrowers were not injured or harmed by use of the MERS® System

FOR IMMEDIATE RELEASE

CONTACTS: Janis L. Smith
Phone: 703-738-0230
Email: This email address is being protected from spambots. You need JavaScript enabled to view it.

Karmela Lejarde
Phone: 703-761-1274
Email: This email address is being protected from spambots. You need JavaScript enabled to view it.

Reston Va., Sept. 9, 2011— In a ruling in favor of Mortgage Electronic Registration Systems, Inc. (MERS) this week, the United States Court of Appeals for the Ninth Circuit affirmed the District Court’s ruling in the putative class action suit pdf Cervantes v. Countrywide Home Loans, Inc., et al. (99 KB) , dismissing all claims against MERS with prejudice and without leave to amend.

“This is a very good ruling for MERS from the federal appellate court for the district covering Arizona, Nevada, and California,” said Janis Smith, MERSCORP Vice President for Corporate Communications. “The Appeals Court explicitly found that the borrowers were not injured or harmed by any action taken by MERS, and that the disclosure of MERS’ role as mortgagee in the standard deed of trust document – which was signed by the borrowers – was a contract.”

In Cervantes, the Appeals Court rejected the plaintiffs’ allegation that use of the MERS® System was a conspiracy to commit fraud that led to predatory lending and the inability to track changes in lenders when mortgages are securitized and sold. In the opinion written by Judge Consuelo M. Callahan, the Court said, “[T]he deed states that the loan or a partial interest in it “can be sold one or more times without prior notice to Borrower…” The opinion also noted that the deed indicates that MERS has “the right to foreclose and sell the property.” Judge Callahan wrote, “By signing the deeds of trust, the plaintiffs agreed to the terms and were on notice of the contents… In light of the explicit terms of the standard deed signed by Cervantes, it does not appear that the plaintiffs were misinformed about MERS’s role in their home loans.”

The plaintiffs also alleged that they relied on misrepresentations about MERS in deciding to enter into their home loans, or that they would not have entered into the loans if they had more information about how MERS worked, and that they were unable to modify their loans because the identity of the beneficial owner was hidden from them. The Appeals Court found that “[T]he plaintiffs have failed to show that the designation of MERS as a beneficiary caused them any injury by, for example, affecting the terms of their loans, ability to repay the loans, or their obligations as borrowers,” and, there was no “explanation as to how the operation of the MERS system actually stymied their efforts to identify and contact the relevant party to modify their loans.”

“This ruling also supports the well established legal principle that MERS, as mortgagee, is an agent for the lender and when MERS holds legal title to the lien, the mortgage follows the note,” added MERSCORP’s Smith. The Court found that “the notes and deeds of trust are not irreparably split: the split only renders the mortgage unenforceable if MERS or the trustee, as nominal holders of the deeds, are not agents of the lenders.”

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FOR IMMEDIATE RELEASE

CONTACTS:
Janis L. Smith
Phone: 703-738-0230
Email: This email address is being protected from spambots. You need JavaScript enabled to view it.

Karmela Lejarde
Phone: 703-761-1274
Email: This email address is being protected from spambots. You need JavaScript enabled to view it.

Reston, Va., August 30, 2011— In pdf Freddie Mac v. Brooks (907 KB) , the U.S. District Court for Alabama’s Eastern Division dismissed with prejudice the borrowers’ counterclaim against Mortgage Electronic Registration Systems, Inc. (MERS) and MERSCORP in response to Freddie Mac’s eviction action.

In this case, Freddie Mac had initially filed an eviction action against the borrowers after the completed foreclosure sale. The borrowers responded by filing a counterclaim against MERS, MERSCORP and Freddie Mac, claiming wrongful foreclosure and alleging that the mortgage was invalid and unenforceable because MERS was not the lender and its role as the mortgagee split the note from the mortgage.

In their motion to dismiss, MERS and MERSCORP cited to the Alabama appellate court decision in Crum v. LaSalle Bank and the U.S. District Court for the Southern District of Alabama in Mortensen v. MERS, arguing that “it is a matter of settled law in Alabama and elsewhere that an agreement between the borrower and lender to designate MERS to serve as the mortgagee as nominee for the lender does not invalidate the mortgage security instrument by ‘splitting’ it from the note,” and that “long before the existence of MERS courts consistently held that a mortgage or deed of trust may designate a person to serve as mortgagee or beneficiary of record other than the obligee or beneficial owner of the debt secured thereby.”

Senior U.S. District Judge W. Harold Albittron agreed with MERS and MERSCORP, dismissing all claims against MERS and MERSCORP with prejudice.

“The Court’s ruling is consistent with many other courts’ rejection of the argument that the note and the mortgage are separated just because MERS is the mortgagee,” said Janis Smith, MERSCORP’s Vice President for Corporate Communications. “When MERS is the mortgagee, the mortgage is enforceable and secures the repayment of the debt. The borrower and the lender agreed to designate MERS as the mortgagee as nominee for the lender, and this does not invalidate the mortgage security instrument.”

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Court upholds MERS’ right to act on behalf of the lender

FOR IMMEDIATE RELEASE

CONTACT: Janis L. Smith
Phone: 703-738-0230
Email: This email address is being protected from spambots. You need JavaScript enabled to view it.

Reston, Va., August 26, 2011— In the United States District Court for the District of Oregon, Portland Division, Judge Michael W. Mosman this week entered final judgment in pdf Neilson v. Wells Fargo Bank, NA, et al. (2.05 MB) , ruling in favor of Mortgage Electronic Registration Systems, Inc. (MERS) and the other defendants.

The plaintiff’s wrongful foreclosure complaint, which was dismissed with prejudice, alleged that MERS was not the beneficiary of plaintiff’s trust deed according to Oregon law, and that the MERS assignment of the trust deed to Wells Fargo was ineffective. Judge Mosman disagreed, basing his ruling on the same Court’s August 8, 2011 decision in pdf Beyer v. Bank of America (144 KB) , which also denied the plaintiff’s preliminary injunction motion and granted MERS’ motion for summary judgment.

In its Opinion and Order in Neilson, the Court cited the Beyer opinion, which said that MERS met the definitional requirement of “beneficiary” under Oregon’s Deed of Trust Act because MERS was named as the beneficiary in the plaintiff’s trust deed and designated as the person who is to receive the benefit of the trust deed. The Court in its Beyer decision also found that MERS’ role as trust deed beneficiary is consistent with Oregon public policy and carries out the intent of the parties to the trust deed. The Court cited the section of the deed of trust that grants MERS the right to act on behalf of the lender, noting that MERS’ role as beneficiary does not change the borrower’s rights and obligation to pay the loan.

Accordingly, the Court in Neilson dismissed all of plaintiff’s claims against MERS because as the Court stated “MERS is a proper beneficiary, as evidenced by the Deed of Trust, and has the right to exercise those steps necessary to recover the debt owed to the lender.”

“This is another federal court ruling in Oregon affirming MERS’ business model and upholding MERS’ rights as the beneficiary,” said Janis Smith, MERSCORP’s Vice President of Corporate Communications. “We have appealed the Court’s decision in the major outlying case, Hooker v. Northwest Trustee Services, to the 9th Circuit Court of Appeals where we will argue for a similar interpretation of Oregon law as the Court’s interpretation here in Neilson.”

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  • About Us

    About Us

    Today’s financial services industry depends on technological innovations to provide its customers with access to information, increased efficiency and reduced processing costs. MERSCORP Holdings, Inc. owns and operates the MERS® System, a national electronic registry system that tracks the changes in servicing rights and beneficial ownership interests in mortgage loans that are registered on the System.

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  • MERS® eRegistry

    MERS® eRegistry

    The MERS® eRegistry is essential to the eMortgage world. It is the legal system of record for identifying the Controller (holder) and Location (custodian) for the authoritative copy of a registered eNote. Lenders today are closing eNotes and selling them into the secondary market. Both Freddie Mac and Fannie Mae require that Lenders register their eNotes on the MERS® eRegistry.

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  • Information for Homeowners

    Information for Homeowners

    Homeowners today want information about their mortgage loans. Some are facing financial hardship and are struggling with mortgage payments. Information and helpful resources are available. 

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  • Neighborhood Benefits

    Neighborhood Benefits

    Title agents, government agencies and others looking for information about mortgage loans registered on the MERS® System can use Servicer ID or MERS® Link. This public access is often used by local municipalities to identify the servicer responsible for maintaining vacant or abandoned property.

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  • Media Room

    Media Room

    The MERSCORP Holdings, Inc. Media Room provides press contact information and facts about the company and its subsidiary, Mortgage Electronic Registration Systems, Inc. (MERS). These materials are provided to help national, regional and local media better understand the companies' business model and role in the U.S. housing finance system.

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